N.H. furniture supplier files Chapter 11
GPS Furniture International, now mostly known as Sunset Trading, will still be selling furniture, despite filing bankruptcy last week.
On Tuesday, a bankruptcy judge ruled that the company – located in Londonderry right outside the Manchester Airport — could dip into its cash to pay workers, despite a bank holding a $1.5 million cash collateral lien.
GPS, which started up in 1988, grew rapidly in the 1990s, stretching out to 42,000 square feet, with sales of nearly $10 million a year and more than 10,000 furniture pieces. In 1997, it purchased Sunset Trading, adopting its overseas contracts and giving it the option to buy direct from Asian factories. It grew particularly strong in sales of youth furniture, prompting it to establish third-party centers in Wisconsin and North Carolina.
But the company suffered a setback several years ago when tough tariffs temporarily knocked out two Chinese factories, said GPS president Harry Leighton, who bought into the company and took over as president in 2005. U.S. Customs grouped the two factories in with firms that allegedly were dumping goods in the United States and slapped a 199 percent tax on them. They were taken off the list three months later, but major customers had already switched distributors.
In addition, the traditional furniture business is suffering, partly as a result of the housing slowdown, but primarily because of competition from the Wal-Marts and Ikeas of the world.
“Younger people are more into disposable and changing furniture. Expense is more important that quality,” said Leighton.
GPS adjusted to the change by selling off warehouses and consolidating into one 42,000-square-foot facility.
“Unfortunately,” said Leighton. “I didn’t think it was going to happen as quickly as it did, and it just caught up with us.”
Now the company – which employs 17 people and 12 sales representatives — is deeply in debt.
With $1.2 million in receivables, it owes $1.6 million to Wells Fargo bank, more than $203,000 to CIT, and some $566,000 to CEO Gary Chase, according to bankruptcy filings signed by Chase. That doesn’t include more than $1 million of unsecured claims.
GPS asked – and the bankruptcy court agreed – for Wells Fargo to release nearly half a million dollars so it could pay its workers and pay for inventory being held in containers in Worcester, Mass.
The company said that if it was able to continue operating under Chapter 11 protection it would be able to lessen its debt, but it might take some time. In the next three weeks, the company projected a profit of roughly $15,000.
“But by the time our operating expenses got in line with expenses, the lending institution lost faith in us and the furniture business,” Leighton said. “That why we had to file.” – BOB SANDERS